Firms must overcomeIT ignorance

When questioned by the English ICA and software house Sage on their levels of IT expertise and awareness of the year-2000 bug, accountants came out with a ‘could do better’ rating.

Technology consultant and chartered accountant Paul Steadman, who chairs the IT group run by the institute’s General Practitioner Board, has a simple explanation for the disappointing results of the survey – ignorance.

‘Unless accountants improve their knowledge base, they won’t be able to realise the benefits it can bring to their own businesses,’ said Steadman. ‘Some senior members of staff took the view that IT was someone else’s problem. They should not be so comfortable, unless they have attained a certain level of IT knowledge.’

A study of firms with one or two partners, conducted for the GPB by Plymouth University researchers, found that nearly all the firms used computers, and most had installed systems in the mid-1980s.

Around 40% of firms used computers to prepare client accounts, but input the data manually from clients’ manual records. A further 30% took clients’ computer-based records, printed them out and manually re-entered them to the practice’s own system. Less than 3% were able to import the data electronically, for example information supplied on a disk.

As a result of such labour-intensive methods, over 75% of most firms’ time was spent churning out routine compliance work – in spite of the fact that accountants overwhelmingly preferred financial planning over compliance work. The top three factors cited by accountants in delaying their move to integrated financial processing were not technical, but cost (97%), lack of skills (94%) and fear of change (88%). As a first step to overcoming these hurdles, the GPB’s ‘A Learning Strategy for IT’ includes a self-help questionnaire. The IT group is also advising the institute’s commercial wing, the Accountancy Business Group, on developing an IT training syllabus.

The year 2000 and its attendant technological problems helped set off the recent fad for technology awareness training.

Sage, the Newcastle-based PC accounts software supplier, is particularly enthusiastic about market research, and recently revealed the findings of a survey of 1,000 accountancy firms’ thoughts on the millennium computer problem.

Awareness of the date change issue was almost total (99%), but 55% of respondents thought it was overhyped by the media. Coincidentally, 56% claimed to have fully year 2000-compliant IT systems.

Gavin May, general manager of Sage’s professional accounts division, was worried that the profession was not being proactive about the millennium bug and added that the issue was ‘multidimensional’ – it affects both accountants and their clients.

Less than a quarter of accountants had done an audit to check that their clients were year-2000 compliant and only 52% planned to do so. Over 80% were confident that IT problems would not prevent them from completing year-end accounts within three months. But, as Sage points out, if clients are unable to access their accounts because their computer systems have crashed, accountants will end up experiencing delays.

There was a strong minority view – 41% – that the millennium bug would close down small and medium-sized companies. This was echoed in another survey of 10,000 businesses, carried out for Huntington-based ProveIt 2000, which concluded that 38,400 businesses are at risk of closure from the bug.

Sage’s research is helping the company strengthen its position as the profession’s best friend when it comes to providing IT advice. Around 42% of firms indicated that clients had approached them for advice on millennium compliance, and Sage’s Accountants Club is helping them supply it, explained May.

‘The club has grown 33% since I joined and is approaching 3,000 members,’ said May. ‘By providing a permanent helpline, we can give accountants the information they need when clients ask.’

May joined Sage earlier this year when it took over his company PACS and its Auditman 2000 accounts preparation software. Soon after the takeover, Sage reorganised and put May in charge of the professional accountants division and its offshoot club. The division’s strategy is to build the developer’s portfolio of productivity tools for accountants.

Last week, another acquisition confirmed this strategy, when Sage bought Pace, the company behind the Winforecast cashflow modelling program.

Sage’s research also confirmed that 77% of firms were asked to advise clients on selecting computer systems. And when it came to accounts software, guess which one they recommended? ‘Overwhelmingly Sage,’ according to Steadman. Yet he considered this to be another sign of a lack of wider IT awareness.

‘Sage has a nice position as market leader. There doesn’t appear to be a thorough understanding of accounts software – people are falling in with everyone else in choosing Sage,’ said Steadman.

It can be assumed, however, that Sage’s dominance is partly built on its appreciation of the role accountants play in paving the way for software sales and in its continuing obsession with what the profession thinks and wants – even when the profession itself is unclear.

There is also no doubt that as the professional institutes and rival software companies recognise the underlying knowledge gap, accountants are going to be subjected to even more focus groups and research surveys.